2001 District FFA
Farm Management Contest
Multiple Choice Section
The Farm Management Contest is designed to test student understanding of the
application of economic principles in farm management. Each question is worth
three (3) points.
Choose the best answer and mark the appropriate box on the score sheet. There
is only one correct answer to each question.
1. Farmer Jones wants to plant a crop with a 4-in spacing in 30-inch rows.
If there are 100,000 seeds in a bushel, how many bushels will he seed per
acre. (Hint: 43,560 sq. ft. in an acre.)
A. 0.24
B. 0.52
C. 1.07
D. 1.91
E. None of the above
2. If the total cost of producing 100 units of output is $500 and the
average variable cost is equal to $1, then which of the following
statements is true?
A. Total variable cost of the 100 units is $400.
B. Total fixed cost is equal to $100.
C. Average fixed cost is equal to $4.
D. Average total cost is equal to $4.
E. None of the above is true.
3. In analysis of a farm, what would you do if a cash flow projection
indicated that there would be more expense than income in a certain
month?
A. Terminate the enterprise causing the cash flow problem that month.
B. Use savings, delay expenses, move up sales, or borrow money.
C. Change from cash to accrual accounting method.
D. Change depreciation methods.
E. None of the above
4. A producer sells 9 feeder steers for $88/cwt. The average weight per
steer is 700 pounds. There is a 2.5% sales commission and yardage fees
of $2.30 per head. The net amount received for the pen of steers would
be
A. $4,240.80
B. $4,618.00
C. $4,770.45
D. $5,384.70
E. None of the above
5. A written agreement by which an owner of property transfers title to
someone for the benefit of beneficiaries is a
A. trust.
B. partnership.
C. corporation.
D. sole proprietorship.
E. None of the above
6. The demand curve shows the relationship between
A. consumer tastes and the quantity demanded.
B. price and the quantity demanded.
C. price and production costs.
D. money income and quantity demanded.
E. None of the above
7. A cattle feeder, wishing to use futures markets to hedge the price of
slaughter cattle, would at the time of his cattle purchase
A. buy futures contracts expecting to sell the contracts when selling
cattle.
B. sell futures contracts expecting to sell more contracts when
selling cattle.
C. sell futures contracts expecting to buy contracts when selling
cattle.
D. buy futures contracts expecting to buy more contracts when selling
cattle.
E. All of the above
8. The capital gains taxes that would be due should a farmer sell his land
is an example of a
A. current liability.
B. long-term liability.
C. deductible expense.
D. contingent liability.
E. None of the above
9. If high oil corn has the same production cost per acre as regular corn
but can be sold for 20 cents per bushel more, what yield of high oil corn
is needed to equal 125 bushels of regular corn at $2.00 per bushel?
A. 109.1 bushels
B. 113.6 bushels
C. 117.5 bushels
D. 120.7 bushels
E. None of the above
10. For tax year 2000, the social security wage base was
A. $50,000
B. $65,000
C. $76,200
D. $92,800
E. None of the above
11. How many total acres are included in the "S 1/2 of the NE 1/4 and E 1/2
of the NW 1/4 of Section 15, Twp. 10N, R4W of the 5th Principle
Meridian"?
A. 80 acres
B. 120 acres
C. 160 acres
D. 240 acres
E. None of the above
12. How much perimeter fence would be required to completely enclose the
parcel of land described in the question above?
A. 1.5 miles
B. 2.0 miles
C. 2.5 miles
D. 3.0 mile
E. None of the above
13. A township is six miles square and includes
A. 6 sections.
B. 36 sections.
C. 40 sections.
D. 160 sections.
E. None of the above
14. If a farmer purchased land for $160,000, has a loan of $100,000 remaining
on the land, and the market value of the land is $200,000, the book value
of the land on the balance sheet will be
A. $40,000.
B. $60,000.
C. $100,000.
D. $160,000 less any accumulated depreciation.
E. None of the above
15. A decrease in the value of the U.S. dollar relative to the currency of
other countries should result in
A. more costly imports.
B. less costly imports.
C. decreased exports.
D. no effect on imports or exports.
E. None of the above
16. In 2000, Pat Parker had net farm income of $25,000. Pat had total
business assets of $850,000 and total liabilities of $350,000. Pat paid
$30,000 in interest. Rate of return on equity for 2000 would be
A. 2.9%
B. 5.0%
C. 6.5%
D. 11.0%
E. None of the above
17. The best measure of a firm's ability to make a short-term loan payment is
A. debt/asset ratio.
B. solvency ratio.
C. current ratio.
D. leverage ratio.
E. net capital ratio.
18. The "rule of 72" says to divide 72 by the annual interest rate to
estimate the number of years needed for an initial investment earning
that rate to double. How long would it take for $1 earning 6% a year to
grow to $4?
A. 12 years
B. 24 years
C. 36 years
D. 48 years
E. None of the above
19. A charge for capital used in a farmer's cattle herd is usually included
in an enterprise budget regardless of the farmer's equity position with
respect to the herd (it does not depend on whether he borrowed money to
buy the cows or not). This illustrates the principle of
A. marginal cost.
B. fixed cost.
C. opportunity cost.
D. variable cost.
E. alternative cost.
20. Net worth is a measure of
A. managerial ability.
B. financial position.
C. profitability.
D. liquidity.
E. All of the above
21. How many pounds of 48% protein soybean meal must be mixed with 7% protein
corn to make a ton of 16% protein feed?
A. 316 pounds
B. 400 pounds
C. 439 pounds
D. 487 pounds
E. None of the above
22. A $1 deductible expense (before tax) will cost ______ after tax if the
farmer's marginal tax rate is 43%.
A. $1.00
B. $0.57
C. $0.43
D. $0.00
E. None of the above
23. On April 1, 2000, Kate borrowed $25,000 to plant corn. On November 1,
2000, she repaid the $25,000 along with $1,421.87 interest. What annual
interest rate did she pay?
A. 8.50%
B. 8.75%
C. 9.25%
D. 9.75%
E. None of the above
24. Purchase of a call option on corn means the buyer
A. is required to sell a corn futures contract at a set price.
B. may sell, but is not required to sell, a corn futures contract at a
set price.
C. may buy, but is not required to buy, a corn futures contract at a
set price.
D. is required to buy a corn futures contract at a set price.
E. None of the above
25. Corn has an expected yield of 120 bushels per acre and has a production
cost of $140.00 per acre. Expected market prices are $2.00 per bushel
for corn and $5.25 per bushel for soybeans. Soybeans can be raised at a
production cost of $110 per acre. At what breakeven yield per acre would
soybeans generate the same net return per acre as dryland corn?
A. 35.2 bushels
B. 38.7 bushels
C. 40.0 bushels
D. 42.0 bushels
E. None of the above
26. The role of price in a free market is to serve as a guide
A. in controlling quantity supplied.
B. in limiting quantity demanded.
C. in allocating consumption.
D. in deciding what, when, and how much to produce.
E. All of the above
27. A grain farmer who normally stores his soybeans at a local elevator has
decided to use the options market to create a synthetic storage. To do
so he will sell his beans at harvest and
A. buy a put option.
B. sell a put option.
C. buy a call option.
D. sell a call option.
28. A $50,000 loan amortized at 8% interest for 20 years yields annual
payments of $5,092.61. How much of the first year's payment is
principal?
A. $1,092.61
B. $1,700.00
C. $2,592.61
D. $4,000.00
E. None of the above
29. For the above loan of $50,000, if the 20th and final payment includes
$377.23 of interest, what was the outstanding principal balance after the
19th payment?
A. $5,688.07
B. $4,715.38
C. $4,622.77
D. $377.23
E. None of the above
30. A farmer has total assets of $500,000 of which land is $300,000. The
farmer's debt:equity ratio is 1.0. What will the farmer's debt:equity
ratio be if the lender devalues the land by 10%?
A. .64
B. .88
C. 1.14
D. 1.22
E. None of the above
31. A farmer purchases 700-pound feeder steers for 89 cents per pound and
plans to sell the steers at 1100 pounds. The farmer estimates the total
cost of gain to be 45 cents per pound. The nearest breakeven price when
the steers are sold at 1100 pounds is
A. 60.7 cents/pound.
B. 70.5 cents/pound.
C. 73.0 cents/pound.
D. 76.7 cents/pound.
E. None of the above
32. If corn silage as fed contains 65% moisture and 2.5% protein, the dry
matter would be what percent protein?
A. 2.50
B. 3.85
C. 5.71
D. 7.14
E. None of the above
33. A soybean producer decides to store his soybeans in the local elevator
for six months. The price at harvest is $4.50 per bushel and the
elevator charges 2 cents per bushel per month for storage plus a 5 cents
per bushel handling charge. He has 4,000 bushels to sell and must borrow
$24,000 at 8% annual interest while he stores the soybeans. What price
must he receive for his soybeans to break even and cover his storage and
opportunity costs?
A. $4.85
B. $4.91
C. $5.03
D. $5.15
E. None of the above
34. At the beginning of last year, a farmer had an outstanding loan for
$125,000. The interest rate was 9% APR. If the farmer made one loan
payment at the end of the year of $22,500, what was the outstanding
balance at the end of the year?
A. $104,500
B. $113,750
C. $115,750
D. $120,500
E. None of the above
35. Which of the following is not a supply shifter for farm products?
A. Weather
B. New technology
C. Government programs
D. Consumer income
E. None of the above
36. The Pig Palace Custom Feedlot purchased a group of feeder pigs weighing
40 pounds each and sold them weighing 260 pounds after feeding them for
125 days. Each pig ate 630 pounds of feed during the feeding period.
Average daily gain for each pig in the group during the feeding period
was
A. 1.67 pounds per day.
B. 1.76 pounds per day.
C. 2.08 pounds per day.
D. 2.86 pounds per day.
E. None of the above
37. Cooperatives pay patronage refunds according to
A. one man, one vote.
B. size of farm.
C. amount of business done by patron.
D. total assets.
E. All of the above
Farmer Douglas will buy 600 pound steers in late October. He will have to pay
$90 per hundredweight for the 600 pound steers. Expected annual prices for
1050 pound steers is $74 per cwt. However, there is normally seasonal
variation in fed cattle prices. The monthly price indexes for slaughter
steers are:
Index Index
January 102 July 96
February 103 August 97
March 104 September 98
April 103 October 99
May 100 November 101
June 97 December 100
38. What price for 1050 pound steers can Mr. Douglas expect for an April
selling date?
A. $71.84 per cwt.
B. $74.00 per cwt.
C. $75.03 per cwt.
D. $76.22 per cwt.
E. None of the above
39. What price can Mr. Douglas expect for a May selling date?
A. $71.84 per cwt.
B. $74.00 per cwt.
C. $75.03 per cwt.
D. $76.22 per cwt.
E. None of the above
40. Assuming an April selling date and all costs (excluding purchase of the
feeder steers) totals $200 per head, Mr. Douglas can expect a profit of
A. less than $0 (he would lose money).
B. $0 - $49.99 per head.
C. $50 - $99.99 per head.
D. $100 - $149 per head.
E. over $150 per head.
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2001 DISTRICT FFA FARM MANAGEMENT CONTEST
Problems Section
Choose the best answer and mark the corresponding numbered space on the answer
sheet. Computations may be done in the margins or on the back of the paper.
Each question is worth four (4) points. There is only one correct answer for
each question.
PROBLEM I - Balance Sheet
Using the information below, complete the net worth statement for January 1,
2001:
Land . . . . . . . . . . . . . . . . . . . . . . . . . $550,000
Autos . . . . . . . . . . . . . . . . . . . . . . . . 22,000
Machinery and equipment. . . . . . . . . . . . . . . . 185,000
Cows . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Calves . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Accounts payable . . . . . . . . . . . . . . . . . . . 16,500
Soybeans . . . . . . . . . . . . . . . . . . . . . . . 18,400
Sows and boars . . . . . . . . . . . . . . . . . . . . 30,000
Market hogs . . . . . . . . . . . . . . . . . . . . . 47,500
Checking and savings . . . . . . . . . . . . . . . . . 9,415
House. . . . . . . . . . . . . . . . . . . . . . . . . 96,000
Hog buildings . . . . . . . . . . . . . . . . . . . . 45,000
Feed and hay . . . . . . . . . . . . . . . . . . . . . 14,250
Accounts receivable. . . . . . . . . . . . . . . . . . 15,500
Accrued interest owed. . . . . . . . . . . . . . . . . 18,750
Accrued taxes owed . . . . . . . . . . . . . . . . . . 17,400
30-year land loan balance is $320,000.
$16,000 plus interest is due March 1 of each year.
7-year building loan balance is $44,000.
$11,000 plus interest is due August 31 of each year.
20-year home loan balance is $78,016.
$8,500 plus interest is due each December 1.
Current Assets: Current Liabilities:
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
Total _________________ Total __________________
Non-current Assets: Non-current Liabilities:
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
Total _________________ Total __________________
Total Assets _________________ Total Liabilities ________________
Net Worth _________________
Questions 1 through 7 refer to PROBLEM I
1. The total value of current assets on January 1, 2001, was:
A. $124,565
B. $140,065
C. $162,065
D. $192,650
E. None of the above
2. The total value of non-current assets was:
A. $892,000
B. $958,000
C. $966,000
D. $988,000
E. None of the above
3. The total value of current liabilities was:
A. $52,650
B. $61,150
C. $63,650
D. $79,650
E. None of the above
4. The total value of non-current liabilities was:
A. $406,516
B. $422,516
C. $433,516
D. $442,016
E. None of the above
5. The net worth was:
A. $621,527
B. $633,399
C. $660,399
D. $668,903
E. None of the above
6. The current ratio was:
A. 0.629
B. 0.891
C. 1.589
D. 2.280
E. None of the above
7. The debt to equity ratio was:
A. 0.439
B. 0.781
C. 1.053
D. 1.280
E. None of the above
PROBLEM II -- Enterprise Budget
Use the following cow-calf budget to answer Questions 8 through 16.
COW-CALF, spring calving, warm season pasture; cost/return per cow; ranch
size unit; winter DM is 25% non-legume hay
______________________________________________________________________________
Operating Inputs Units Price Qty. Value Your Value
Non-legume hay Lbs. 0.050 964.000 $48.20 __________
41-45% protein sup. Lbs. 0.130 299.000 38.87 __________
19-20% pro. feed Lbs. 0.080 367.000 29.36 __________
Salt & minerals Lbs. 0.100 30.000 3.00 __________
Summer pasture AUMs 8.400 8.000 67.20 __________
Winter dry pasture AUMs 8.400 3.550 29.82 __________
Vet. service Head 14.650 1.000 14.65 __________
Vet. med., lstk. supplies Head 2.800 1.000 2.80 __________
Marketing expense Cwt. 1.750 4.320 7.56 __________
Personal taxes Head 5.300 1.000 5.30 __________
Herd bulls Cwt. 85.000 0.122 10.37 __________
Hauling Cwt. 0.500 4.320 2.16 __________
Annual operating capital Dol. 0.107 150.000 16.05 __________
Machinery labor Hour 6.000 4.574 27.42 __________
Equipment labor Hour 6.000 0.050 0.30 __________
Livestock labor Hour 6.000 5.330 31.98 __________
Mach. fuel, lube, repair Dol. 27.30 __________
Equip. fuel, lube, repair Dol. 1.18 __________
Total operating costs $363.52 __________
Fixed costs
Machinery: Amount Value
Interest at 10.675% 54.58 5.83 __________
Depr., taxes, insurance 10.69 __________
Equipment:
Interest at 10.675% 13.43 1.43 __________
Depr., taxes, insurance 2.59 __________
Livestock
Beef cow 720.00 _______
Bull 40.50 _______
Beef heifer 60.00 _______
Horse 3.40 _______
Interest at 10.675% 823.90 87.95 __________
Depr., taxes, insurance 10.47
Total fixed costs 118.96 __________
Production Units Price Quantity Value
Steer calves (400-500#) Cwt. 87.00 1.92 167.04 __________
Heifer calves (400-500#) Cwt. 79.00 1.27 100.33 __________
Commercial cows Cwt. 41.00 0.87 35.67 __________
Aged bulls Cwt. 51.00 0.14 7.14 __________
Heifers (600-700#) Cwt. 72.00 0.12 8.64 __________
Total receipts 318.82
Returns above total operating costs -44.70 __________
Returns above all specified costs -163.66 __________
______________________________________________________________________________
8. Total operating cost per cow is:
A. $16.05
B. $118.96
C. $318.82
D. $363.52
E. None of the above
9. The return above total operating cost per cow is:
A. -$163.66
B. -$44.70
C. $318.82
D. $363.52
E. None of the above
10. How many hours of labor are budgeted per cow?
A. 6.000
B. 9.954
C. 18.000
D. 59.700
E. None of the above
11. What is the total budgeted interest cost per cow?
A. $68.01
B. $87.95
C. $95.21
D. $111.26
E. None of the above
12. What price per ton is paid for hay?
A. $5.00
B. $48.20
C. $50.00
D. $100.00
E. None of the above
13. What are the per cow costs directly attributed to feed?
A. $97.02
B. $119.43
C. $168.25
D. $216.45
E. None of the above
14. How many pounds of cattle are sold per cow?
A. 319
B. 432
C. 450
D. 500
E. None of the above
15. If the price of all cattle sold increases by 10% and the price of hay
drops by 50%, what will be the per cow receipts above total operating
costs (ignore any change in operating capital expense)?
A. $11.28
B. $55.97
C. $62.87
D. $107.68
E. None of the above
16. What will be the returns above all costs if you include the changes
from question 15 and pay only $60 for pasture rent?
A. -$99.81
B. -$70.66
C. -$13.27
D. $188.10
E. None of the above
PROBLEM III -- Income Tax Management
Use the tables at the end of this exam to calculate depreciation on the
following item.
On March 15, 2000, Dave paid $26,000 to buy a used tractor.
17. The tractor is:
A. 3-year property
B. 5-year property
C. 7-year property
D. 10-year property
E. None of the above
18. If Dave does not expense any of the cost of the tractor, then 2000
depreciation will be (use regular MACRS and mid-quarter convention):
A. $2,785.64
B. $3,482.18
C. $4,464.85
D. $4,875.00
E. None of the above
19. If Dave expenses the maximum on the tractor, and uses the mid-year
convention and regular MACRS, then 2000 depreciation will be:
A. $642.84
B. $749.98
C. $1,300.00
D. $2,785.64
E. None of the above
20. If Dave expenses the maximum and uses the mid-year convention and
straight line depreciation over the alternate MACRS life, his 2000
depreciation will be:
A. $260.00
B. $300.00
C. $428.57
D. $1,300.00
E. None of the above
21. If Dave uses regular MACRS, then the first year the tractor will
appear on Dave's January balance sheet with a zero book value will be
in
A. 2005.
B. 2006.
C. 2007.
D. 2008.
E. None of the above
22. Under MACRS, business automobiles are classified as
A. 3-year property
B. 5-year property
C. 7-year property
D. 10-year property
E. None of the above
PROBLEM IV -- Supply and Demand
